ROME (Reuters) – Chinese President Xi Jinping arrived in Rome on Thursday at the start of a three-day visit during which he will sign an accord drawing Italy into his giant “Belt and Road” infrastructure plan despite U.S. opposition.

Italy, seeking a welter of new export deals to boost its stalled economy, will become the first Group of Seven major industrialized nation to join the multi-billion-dollar project which is designed to improve Beijing’s global trade reach.

FILE PHOTO: A sign advertises homes for sale in a new housing development in Dickinson, North Dakota January 21, 2016. REUTERS/Andrew Cullen

March 21, 2019

By Jason Lange

WASHINGTON (Reuters) – The Federal Reserve’s decisive statement this week that interest rates are unlikely to rise this year sends a signal to U.S. households: keep buying stuff.

The Fed tries to guide the U.S. economy by controlling the interest rate banks charge one another for overnight loans. Moving this rate up lifts other rates in the economy, making it costlier for people to use their credit cards or to buy homes and cars. Higher rates also make companies rethink investments.

A solid majority of Fed policymakers on Wednesday said higher rates are unlikely this year, leading investors to bet the economy might slowing enough for the Fed to actually cut rates.

The following are some possible consequences for American households:

EASY CREDIT

The Fed’s signal on its interest rate outlook led key market rates to fall, including the yield on 10-year Treasury bonds. That is a sign that rates are also falling for loans used to buy houses and cars. Interest rates for credit cards may also drift lower. Mortgage rates have been falling since November when Fed policymakers made clear they would be patient about rate decisions.

GRAPHIC-Falling mortgage rates: https://tmsnrt.rs/2UOhJvq

SAVING DISCOURAGED

Lower rates also encourage spending by taking the shine off some common ways to save money. Low yields reduce the return on money in savings accounts as well as in funds made up of safe-haven government bonds. This poses a problem for retirees who depend more on their income from savings and who take a hit from lower rates on Treasury bonds. The Fed has argued that retirees benefit from actions taken to support the broader economy.

GRAPHIC-Weak returns on deposits: https://tmsnrt.rs/2HwPA9n

RETIREMENT BOOST

Rising stock prices comprise the flip side of lower bond yields. That boosts the value of private retirement accounts, such as 401(k)s, particularly those of young people whose accounts tend to be weighted toward stocks.

The benchmark S&P 500 stock index surged after the Fed’s decision, reflecting the view that cheaper borrowing costs would help company profits. It is possible that stock market gains could boost consumer spending because people sometimes loosen their purse strings after a rise in perceived wealth.

GRAPHIC-Rate pressure: https://tmsnrt.rs/2UNxaEj

BUOYANT LABOR MARKET

The U.S. jobless rate is near its lowest level in 50 years although lately there have been signs of softening in the labor market. Hiring slowed sharply in February and the number of new jobless claims every week has also been ticking higher. The Fed’s action aims to keep the labor market solid. That could help encourage more people to rekindle job searches they had given up when the economy was still weak following the 2007-09 financial crisis.

FILE PHOTO: U.S. Trade Representative Robert Lighthizer testifies at a House Ways and Means Committee on U.S.-China trade in Washington U.S., February 27, 2019. REUTERS/Kevin Lamarque

March 21, 2019

By Philip Blenkinsop

BRUSSELS (Reuters) – The European Union’s plans for trade negotiations with the United States fall far short of what is required and any idea of delaying formal talks would not work, the U.S. ambassador to the EU said on Thursday.

The European Commission, which negotiates trade deals on behalf of the 28 EU countries, has presented two negotiating mandates to governments for approval, one on reducing tariffs on industrial goods, the other on making it easier for companies to clear their products for sale on both sides of the Atlantic.

“The mandate that is being circulated falls far short of what even (Commission) President Juncker and President Trump discussed in July in Washington. The idea was to have a wide-ranging conversation about all aspects of our relationship,” Gordon Sondland told an AmCham business conference in Brussels.

The EU and the United States ended months of standoff in July when President Donald Trump agreed with Jean-Claude Juncker not to hit EU car imports with extra tariffs while the two sides worked on improving economic ties.

EU governments have failed so far to agree on launching formal trade talks, Germany pressing for a quick start, and France bidding for more time.

Stalling, said Sondland, would have consequences.

“The more the EU leadership plays the delay game the more we will have to use leverage to realign the relationship,” he said.

Some in Europe, he said, believed they could simply wait for a new U.S. president, but this tactic would not work.

“The (U.S.) Democrats disagree with President Trump on many issues…. but when it comes to fixing our trade imbalance with the EU there is no daylight between (us), none,” he said.

A key part of the July agreement was to remove import duties on “non-auto industrial goods”. The EU has said cars should be included and rejected Washington’s demand that agriculture should feature in talks too.

U.S. Trade Representative Robert Lighthizer told Congress last week that discussions were at a “complete stalemate”.

The EU says progress has been made – its two negotiating mandates, discussions of possible regulatory cooperation and the doubling of U.S. soybean imports into Europe since July, although mainly because they are cheaper than rival imports.

Sondland repeated the U.S. line that agriculture had to be part of trade discussions, but acknowledged that the two sides could build up deals piece by piece, as long as they did move though the issues.

People take part in a protest against government’s plans to overhaul the Hungarian Academy of Sciences, on the Chain Bridge in Budapest, Hungary, March 21, 2019. The banner reads “Free academy”. REUTERS/Tamas Kaszas

March 21, 2019

By Gergely Szakacs

BUDAPEST (Reuters) – Around 1,000 people rallied outside the Hungarian Academy of Science (HAS) on Thursday to protest against government moves to overhaul the institution, which scientists say is the latest threat to academic independence.

Prime Minister Viktor Orban, who took power in 2010, has tightened controls over Hungarian public life, including the courts, the media and the economy, as well as education and now scientific research.

The European Parliament’s main center-right bloc voted on Wednesday to suspend Orban’s Fidesz party amid concerns it has violated European Union principles on the rule of law.

Some of the protesters on Thursday carried EU flags and waved banners saying “Thinking does not harm your health”.

“The Hungarian Academy of Science is a trustee of the preservation and development of Hungarian culture and science,” the Forum of Academy Workers, a movement founded by HAS research staff, said on its Facebook page.

“Yet, our nearly 200-year-old national institution is left fighting for its survival.”

OVERHAUL

The second protest against Orban’s reforms in as many months followed an accord between the ministry overseeing the overhaul and leaders of the academy to separate the science research network from the academy’s teaching institutions.

The research arm would be run by a new management body, with members selected by the government and the academy, according to a joint letter of intent signed early this month.

But HAS staff said the accord, reached as a result of what they called government “blackmail”, was unacceptable.

The academy is solely funded by the government but self-managing, with a network of scientific research bodies employing about 5,000 people.

The rally was due to march to the Innovations and Technology Ministry to wave red cards at minister Laszlo Palkovics, architect of the reform, which is due to take effect at the start of next year.

Orban’s government says the aim of the reform is to reap more economic benefits from scientific research.

“My actions are driven solely by the desire to make the Academy and the entire Hungarian research ecosystem more efficient,” Palkovics told private broadcaster atv.hu.

The demonstrators rejected that argument.

“This is a pretty dangerous tendency when we talk about the need for science to turn a profit immediately and manage scientific life solely according to economic interests,” said 19-year-old student Milan Szabo.

Concerns over the erosion of academic freedom and other democratic rights in Hungary have triggered several anti-government demonstrations in recent months.

SAN FRANCISCO/WASHINGTON (Reuters) – Federal Reserve policymakers see a U.S. economy that is rapidly losing momentum. They predict inflation will miss their 2 percent target for yet another year, despite rising wages, and they expect unemployment to increase.

Fed Chairman Jerome Powell’s view of it all? He calls these fundamentals “very strong,” says the economy is in a “good place and sees the outlook as “favorable.”

Welcome to the new normal.

Powell’s upbeat assessment of a deteriorating economy shows how completely the Fed has embraced a world of stubbornly weak inflation, permanently slower growth and chronically low interest rates that give the central bank precious little room for conventional policy easing when the next downturn arrives.

It is a situation that poses risks to the Fed’s credibility, given the long-running failure to lift inflation to a target first specified in 2012 in hopes of guiding the economy upward. It also raises the stakes over an evolving debate about the need for fiscal, social and other policies that may be targeted to pick up the slack.

“It feels like the Fed has come to Jesus on this topic,” said University of Oregon economics professor Tim Duy, who believes the abrupt revisions to Fed forecasts show the Fed may have already raised interest rates too far. “The secular stagnation story, some part of it, must in fact be a reality.”

Powell delivered his message on Wednesday as the Fed signaled it is likely finished with the interest rate increases it started back in 2015, and hinted that should the outlook worsen, a rate cut may be next.

“We are very mindful… of what the risks are,” Powell said after the Fed held its target range for short-term rates steady at 2.25 percent to 2.5 percent. “We don’t see data coming in that suggests we should move in either direction… We should remain patient and let the situation clarify over time; when the time comes, we will act appropriately.”

DOWN IN THE DUMPS?

At least nine and perhaps as many as 15 of the Fed’s 17 policymakers slashed their interest rate forecasts, with most seeing no rate hikes this year. As a group they now believe the economy has lost perhaps a third of its momentum compared with last year, and will grow around 2.1 percent in 2019.

What about the idea they would need to boost rates high enough to brake growth and actually curb inflation, a feature of their outlook in 2018? A thing of the past.

If anything, the Fed’s concern has shifted in the other direction, toward inflation remaining so low it undermines business and household expectations about the future, another potential drag on growth if either sector becomes more cautious in spending.

To some analysts, the abrupt revisions sound like a warning.

“What does the Fed know that it’s not saying?” asked Marvin Loh, global macro strategist at State Street.

“I think we are bracing for another shoe to drop,” said Scott Anderson, chief economist at Bank of the West in San Francisco.

That was also the view of financial markets, with short-term interest-rate futures quickly pricing in a rate cut next year.

Powell noted risks to his positive outlook include a slowdown in Europe and ongoing trade tensions with China.

RISK OF THE LESS-LIKELY OUTCOME

To others, however, it seemed like confirmation of an inconvenient truth: that global growth may have peaked, leaving countries stuck in slow-growth mode and reliant on fiscal policy to keep from grinding to a halt. In addition, they will have to carry the load of recovery should a recession occur.

“Even once this episode is past, what do things look like? In the Fed’s view it is a world of sub-2 percent growth” over the long run, said Nathan Sheets, chief economist at PGIM Fixed Income and a former U.S. Treasury official. “By U.S. historical standards, it is not great.”

Central banks in Japan and Europe are in a similar fix, fueling a global debate about whether, given chronically low interest rates, it makes sense for larger and economically more dynamic nations to borrow more for investments in infrastructure, education, climate adaptation and other endeavors that would have a clear public return.

“It is a different world,” former International Monetary Fund Chief Economist Olivier Blanchard said in a meeting with reporters recently at the Peterson Institute for International Economics. “We are going to be in a world where monetary policy is highly constrained and fiscal (policy) will become central.”

Originally skeptical of the secular stagnation argument that low growth in developed nations is hardwired into the long-term outlook by aging populations that over-save, he said he now views that as the “more likely” state of affairs.

The issue now is whether the current slow-growth expansion will continue indefinitely in the hoped-for “soft landing” that the Fed foresees in its current projections.

There are arguments to the contrary. The recently released Economic Report of the President projected growth will remain near 3 percent this year and could edge up in coming years if, for example, the now-temporary household tax cuts approved in 2017 are made permanent. Resolution of current global trade frictions could also raise the global outlook.

But 2018, a year that began with U.S. and world officials heralding an era of synchronized global growth, may also prove the outlier.

Said Bank of the West’s Anderson: “Even with the U.S. pausing, it might not be enough to stop a global downturn.”

BEIRUT (Reuters) – U.S. sanctions on Hezbollah are harming Lebanon as a whole, President Michel Aoun said on Thursday ahead of a visit to the country by U.S. Secretary of State Mike Pompeo.

The United States deems the heavily armed, Iran-backed Hezbollah group a terrorist organization and has been steadily increasing financial sanctions against it as part of efforts to counter Iran.

Shi’ite Muslim Hezbollah has a large armed militia that has helped Syrian President Bashar al-Assad in his eight-year war against rebels, but it is also a political party in Lebanon with seats in the parliament and cabinet.

“Lebanon is within the siege that has been imposed on others, particularly on Iran. And it is passing, as a result of that, through a big crisis,” Aoun told Russian media in Lebanon, the Lebanese Presidency office said.

Sanctions against Hezbollah introduced since 2016 raised fears among Lebanese that U.S. correspondent banks might deem Lebanese banks too risky to do business with, harming a major part of Lebanon’s economy.

However, Lebanon’s Central Bank has repeatedly said that the banking sector is fully compliant with sanctions and that foreign institutions are satisfied with how it implements regulation.

“We don’t expect more measures against the banks,” Aoun, a Hezbollah ally, said.

But he said the “negative impact of the siege on Hezbollah afflicts all Lebanese, as it does the Lebanese banks”.

“Every Lebanese bank has uncertainty about dealing with a depositor, fearing that he has a link with Hezbollah … This mutual fear does not build an economy and sound trade relations,” he added.

U.S. Secretary of State Pompeo is due to visit Lebanon on Friday and Saturday after trips to Kuwait and Israel. In Israel, Pompeo described Iran-backed Hezbollah as a risk to the Lebanese.

Aoun is scheduled to visit Russia over March 25-26 after being invited by President Vladimir Putin, Aoun’s office said.

FILE PHOTO: A Ryanair aircraft stands on the tarmac at Frankfurt-Hahn Airport during a strike of their pilots and cabin crew in Hahn, near Frankfurt, Germany, September 12, 2018. REUTERS/Ralph Orlowski

March 21, 2019

FRANKFURT (Reuters) – Two deadly crashes involving Boeing’s 737 MAX jet have not changed Ryanair’s plans to buy the model, an executive of the Irish airline told Reuters on Thursday.

“Nothing changes because we are still awaiting the outcome of the investigation,” Chief Marketing Officer Ryanair Kenny Jacobs said.

He added that the delayed deliveries of five of the airliners to Ryanair will not have an impact on the budget carrier’s summer schedule.

FILE PHOTO: A Ryanair aircraft stands on the tarmac at Frankfurt-Hahn Airport during a strike of their pilots and cabin crew in Hahn, near Frankfurt, Germany, September 12, 2018. REUTERS/Ralph Orlowski

March 21, 2019

FRANKFURT (Reuters) – Two deadly crashes involving Boeing’s 737 MAX jet have not changed Ryanair’s plans to buy the model, an executive of the Irish airline told Reuters on Thursday.

“Nothing changes because we are still awaiting the outcome of the investigation,” Chief Marketing Officer Ryanair Kenny Jacobs said.

He added that the delayed deliveries of five of the airliners to Ryanair will not have an impact on the budget carrier’s summer schedule.

JERUSALEM (Reuters) – Israel said on Thursday a U.N. report critical of its use of lethal force during Palestinian protests on the Gaza border was biased and should have included a demand that the enclave’s dominant Hamas group take action to stop anti-Israeli violence.

A U.N. Commission of Inquiry on the demonstrations, which began nearly a year ago, said this week that Israel should investigate the shootings of more than 6,000 people, far beyond the criminal inquiries it has announced into 11 killings.

Issuing an official response to the commission’s report, Israel said it had “serious concerns about the factual and legal analysis conducted by the commission, its methodologies and the clear evidence of political bias against Israel”.

Gaza health authorities say some 200 people have been killed and thousands injured by Israeli fire since Palestinians launched the protests. One Israeli soldier was shot dead by a Palestinian sniper along the frontier.

Protesters have been demanding the lifting of an Israeli blockade of the territory and a right to return to land from which their ancestors fled or were expelled. Israel has said it has no choice but to use deadly force to defend the frontier.

Addressing the U.N. Human Rights Council in Geneva on Monday, the inquiry commission’s chairman, Santiago Canton, called on Israel, which boycotted the day-long debate, to review immediately its military’s rules of engagement.

Israel’s response, published on its Foreign Ministry’s website, said the commission’s “bias is most evident in (its) absolute failure … to make recommendations concerning Hamas”.

The militant group, Israel said, sends women, children and others to sabotage the Israeli security fence along the frontier and to act as shields for armed attacks. Balloons and kites have been flown across the border into Israel to start fires.

“If the commission seriously wished to provide an objective report that would contribute towards human rights and the safety of individuals, (it) would have seen fit to demand Hamas take action in the context of these events,” Israel said.

Asked about the Israeli allegations, Sami Abu Zuhri, a Hamas official in Gaza, said “most of those killed were hit hundreds of meters from the fence – evidence that Israeli soldiers had deliberately targeted them”.

A summary accompanying the 252-page report said protest organizers “encouraged or defended demonstrators’ indiscriminate use of incendiary kites and balloons”, and Gaza’s de facto authorities did not stop such acts.

The Human Rights Council, a 47-member forum, is due to vote on Friday on four resolutions related to the occupied Palestinian territories.

European states are divided on the resolutions, including a text related to the Gaza inquiry, with some expected to vote against and others abstaining, diplomats said.

The United States, Israel’s closest ally, quit the Geneva forum last year over what it says is bias against Israel.

Gaza is home to 2 million Palestinians, mainly stateless descendants of people who fled or were driven from Israel on its founding in 1948. Israel captured Gaza in a 1967 war but pulled out troops and settlements in 2005. Hamas took control in 2007.

Since then, Israel has fought three wars against the Islamist group and, along with Egypt, imposed a blockade of the territory that the World Bank says has collapsed its economy.

(Additional reporting by Nidal al-Mughrabi in Gaza and Stephanie Nebehay in Geneva)

JERUSALEM (Reuters) – Israel said on Thursday a U.N. report critical of its use of lethal force during Palestinian protests on the Gaza border was biased and should have included a demand that the enclave’s dominant Hamas group take action to stop anti-Israeli violence.

A U.N. Commission of Inquiry on the demonstrations, which began nearly a year ago, said this week that Israel should investigate the shootings of more than 6,000 people, far beyond the criminal inquiries it has announced into 11 killings.

Issuing an official response to the commission’s report, Israel said it had “serious concerns about the factual and legal analysis conducted by the commission, its methodologies and the clear evidence of political bias against Israel”.

Gaza health authorities say some 200 people have been killed and thousands injured by Israeli fire since Palestinians launched the protests. One Israeli soldier was shot dead by a Palestinian sniper along the frontier.

Protesters have been demanding the lifting of an Israeli blockade of the territory and a right to return to land from which their ancestors fled or were expelled. Israel has said it has no choice but to use deadly force to defend the frontier.

Addressing the U.N. Human Rights Council in Geneva on Monday, the inquiry commission’s chairman, Santiago Canton, called on Israel, which boycotted the day-long debate, to review immediately its military’s rules of engagement.

Israel’s response, published on its Foreign Ministry’s website, said the commission’s “bias is most evident in (its) absolute failure … to make recommendations concerning Hamas”.

The militant group, Israel said, sends women, children and others to sabotage the Israeli security fence along the frontier and to act as shields for armed attacks. Balloons and kites have been flown across the border into Israel to start fires.

“If the commission seriously wished to provide an objective report that would contribute towards human rights and the safety of individuals, (it) would have seen fit to demand Hamas take action in the context of these events,” Israel said.

Asked about the Israeli allegations, Sami Abu Zuhri, a Hamas official in Gaza, said “most of those killed were hit hundreds of meters from the fence – evidence that Israeli soldiers had deliberately targeted them”.

A summary accompanying the 252-page report said protest organizers “encouraged or defended demonstrators’ indiscriminate use of incendiary kites and balloons”, and Gaza’s de facto authorities did not stop such acts.

The Human Rights Council, a 47-member forum, is due to vote on Friday on four resolutions related to the occupied Palestinian territories.

European states are divided on the resolutions, including a text related to the Gaza inquiry, with some expected to vote against and others abstaining, diplomats said.

The United States, Israel’s closest ally, quit the Geneva forum last year over what it says is bias against Israel.

Gaza is home to 2 million Palestinians, mainly stateless descendants of people who fled or were driven from Israel on its founding in 1948. Israel captured Gaza in a 1967 war but pulled out troops and settlements in 2005. Hamas took control in 2007.

Since then, Israel has fought three wars against the Islamist group and, along with Egypt, imposed a blockade of the territory that the World Bank says has collapsed its economy.

(Additional reporting by Nidal al-Mughrabi in Gaza and Stephanie Nebehay in Geneva)

VALENCIA, Spain (Reuters) – The chairman of Spain’s Bankia on Thursday said the state-owned lender would meet its net profit target of 1.3 billion euros ($1.48 billion) in 2020 despite the current low interest-rate environment.

“We will stick to our net profit target and to our plan to pay back 2.5 billion euros to our shareholders,” Jose Ignacio Goirigolzarri told journalists in Valencia, a day before the annual shareholder meeting.

Analysts have been questioning whether the lender would be able to meet its net profit target for 2020 after the European Central delayed any prospects of interest rates rises until 2020.

Imported automobiles are parked in a lot at the port of Newark New Jersey, U.S., February 19, 2019. REUTERS/Eduardo Munoz

March 21, 2019

WASHINGTON (Reuters) – A conservative group has sued the U.S. government for access to a report on whether auto imports pose a big enough security risk to justify hefty tariffs on the sector, part of a growing chorus demanding a copy of the document.

Cause of Action Institute (CoA), a watchdog aligned with the conservative political activists David and Charles Koch, asked the District of Columbia Federal Court on Wednesday to require the Commerce department to hand over a copy of the report, which could unleash tariffs of up to 25 percent on imported cars and parts.

Last month, Commerce Secretary Wilbur Ross submitted the so-called “Section 232” national security report to President Donald Trump, starting a 90-day countdown for him to decide whether to impose the tariffs on millions of imports.

The Commerce department declined to comment.

The industry has warned that tariffs could add thousands of dollars to vehicle costs and potentially lead to hundreds of thousands of job losses throughout the U.S. economy.

The Commerce Department started its investigation in May 2018 at Trump’s request. Known as a Section 232 investigation, its purpose was to determine the effects of imports on national security. It had to be completed by February.

In the suit, CoA alleged the Commerce Department has missed deadlines to respond to Freedom of Information Act Requests it filed for the report on Feb. 18, a day after the report was sent to the White House.

Republican Senator Chuck Grassley, chairman of the Senate Finance Committee, has also sought a copy of the report without success, Politico reported.

Administration officials have said tariff threats on autos are a way to win concessions from Japan and the EU. Last year, Trump agreed not to impose tariffs as long as talks with the two trading partners were proceeding in a productive manner.

(Reporting by Alexandra Alper; Additional Reporting by David Shepardson and David Lawder; Editing by Dan Grebler)

FILE PHOTO: A gas flare on an oil production platform in the Soroush oil fields is seen alongside an Iranian flag in the Persian Gulf, Iran, July 25, 2005. REUTERS/Raheb Homavandi

March 21, 2019

By Alex Lawler

LONDON (Reuters) – Iran’s oil exports have dropped in March to their lowest daily level this year, according to tanker data and industry sources, even before Washington formally requires importing countries to reduce purchases to avoid infringing U.S. sanctions.

Shipments are averaging between 1.0 and 1.1 million barrels per day (bpd) so far this month, according to Refinitiv Eikon data and three other companies that track Iranian exports. That’s lower than February, when shipments were at least 1.3 million bpd.

Shipments have dropped from at least 2.5 million bpd in April 2018, the month before U.S. President Donald Trump withdrew the United States from a 2015 nuclear deal with Iran and reimposed sanctions, fueling a year of economic crisis in the country.

Tehran has vowed to keep exporting oil despite U.S. efforts to reduce its shipments to zero, but the export decline could be another indicator of economic pressure from the embargo.

In a new year speech on Thursday, Iran’s Supreme Leader Ayatollah Ali Khamenei said the Islamic Republic had resisted U.S. sanctions and called on the government to boost national production to face enemy pressures.

For the oil market, the drop in Iranian shipments will add to an OPEC-led oil supply cut and comes ahead of U.S. plans to clamp down further on Iranian exports from May, after ending of the current round of fairly generous waivers from sanctions.

Still, the Organization of the Petroleum Exporting Countries and its allies, which began cutting production from Jan. 1 to bolster prices, are unlikely to be in a rush to change course, analysts say, without concrete signs of a shortage.

“However, we don’t think that OPEC will increase its production in anticipation of lower Iranian oil exports, but only if there are clear signs of further Iran and/or Venezuelan export cuts in the market,” Vakhshouri said.

Venezuela, an OPEC member, is also under U.S. sanctions which have curbed its exports.

Iran’s export levels have become more opaque since U.S. sanctions on the country’s oil sector took effect in November, although estimates of March supplies are falling into a narrower range than in previous months.

Kpler, a company that tracks oil flows, said Iranian shipments so far in March had dropped sharply to 1.03 million bps from 1.44 million bpd in February.

“Iranian crude loadings have struggled through the first half of March,” Kpler said in a report, although it said exports would rise closer to 1.3 million bpd in the rest of March.

FILE PHOTO: The HSBC bank logo is seen in the Canary Wharf financial district in London, Britain, March 3, 2016. REUTERS/Reinhard Krause

March 21, 2019

By Lawrence White

LONDON (Reuters) – HSBC has signed a deal to offer BlackRock’s Aladdin investment management software to the bank’s wealthy customers, in a boost to the U.S. asset manager’s plans to squeeze money from technology by selling it to rivals.

Aladdin began as an internal tool at BlackRock before becoming the linchpin of Chief Executive Larry Fink’s plan to increase revenues from technology. It is used by investment managers to help to oversee risks and make investment decisions.

Robert Goldstein, chief operating officer at BlackRock, said HSBC’s scale would mean many more advisers would have access to capabilities previously only available to institutional investors.

The partnership between Europe’s largest bank and the world’s biggest asset manager comes as both industries are battling to use technology to increase profits and improve service.

Guilherme Lima, HSBC’s group head of wealth management, said the software would help investors to understand hidden risks in their portfolios by acting as an ‘X-ray’ that could look through a mix of individual stock holdings, mutual funds and index trackers to reveal that all of them are exposed to a single stock, for example, or macro-economic risk.

That will help HSBC to respond to growing demand from wealthy customers for their banks to offer advice rather than simply selling products.

“It’s about being able to have a detailed conversation with the client and provide more value added advice,” Stuart Parkinson, global head of product, investments and collaboration in HSBC’s private bank, said.

BlackRock’s Fink has said he aims to increase revenues from technology to 30 percent of the firm’s total by 2022, as the broader stockpicking business has come under pressure from lower cost index funds.

More than 200 institutions and around 25,000 investment professionals use Aladdin and its risk analytics, BlackRock says.

Some market participants have questioned whether this presents a systemic risk, as the growing number of firms using the software for investment decisions could make portfolios more correlated and hence exposed to market shocks.

BlackRock executives have downplayed this idea, saying customers use Aladdin in different ways to suit their own purposes.

HSBC has already begun to roll out the platform in the United States and in Hong Kong, the bank said. Over the next 2-3 years Aladdin will eventually be offered to all customers who hold $1 million or more with the bank.

HSBC’s retail bank and its private bank which serves wealthier customers both chose Aladdin independently of each other after running a lengthy procurement process, HSBC’s Parkinson said.

LONDON (Reuters) – Deutsche Bank on Thursday hiked its expectation of a no-deal Brexit to 20 percent – the highest level ever – from 10 percent as the third attempt to get UK parliamentary approval for the nation’s exit from the European Union looms.

“The risks of a last-minute accident have increased,” said Oliver Harvey, head of Brexit research at the German bank, adding that “government strategy appears to be being made off the hoof”.

Deutsche Bank’s new call on a no-deal Brexit came after JP Morgan also upped its chances of an exit without a deal to 15 percent from 10 percent. The deadline for an agreement on Brexit is next Friday.

Deutsche Bank cut its estimated chances of UK Prime Minister May winning the next parliamentary vote on her Brexit deal to 25 percent, from 35 percent previously.

“In a worst-case scenario, we anticipate the government will seek an emergency extension of Article 50 even as late as the end of next week, should the third attempt to ratify the Withdrawal Agreement fail,” Harvey wrote.

He ascribed a 55-percent probability to that outcome.

The bank also closed its “short EUR/GBP” recommendation as ratification of Prime Minister May’s deal was no longer its base case.

Deutsche Bank had trimmed its expectation of a no-deal Brexit from 15 percent to 10 percent at the end of last month.

LONDON (Reuters) – Deutsche Bank on Thursday hiked its expectation of a no-deal Brexit to 20 percent – the highest level ever – from 10 percent as the third attempt to get UK parliamentary approval for the nation’s exit from the European Union looms.

“The risks of a last-minute accident have increased,” said Oliver Harvey, head of Brexit research at the German bank, adding that “government strategy appears to be being made off the hoof”.

Deutsche Bank’s new call on a no-deal Brexit came after JP Morgan also upped its chances of an exit without a deal to 15 percent from 10 percent. The deadline for an agreement on Brexit is next Friday.

Deutsche Bank cut its estimated chances of UK Prime Minister May winning the next parliamentary vote on her Brexit deal to 25 percent, from 35 percent previously.

“In a worst-case scenario, we anticipate the government will seek an emergency extension of Article 50 even as late as the end of next week, should the third attempt to ratify the Withdrawal Agreement fail,” Harvey wrote.

He ascribed a 55-percent probability to that outcome.

The bank also closed its “short EUR/GBP” recommendation as ratification of Prime Minister May’s deal was no longer its base case.

Deutsche Bank had trimmed its expectation of a no-deal Brexit from 15 percent to 10 percent at the end of last month.

LONDON (Reuters) – Asian spot prices for liquefied natural gas (LNG) broke below the $5 per million British thermal unit (mmBtu) mark this week following a 13-week price slide that reflects the absence of growth in demand or any major outages.

Spot prices for May delivery to Northeast Asia dropped 80 cents to $4.65 per million British thermal units (mmBtu) this week according to traders although there were few actual transactions with Asia’s biggest buyers, Japan, Korea or China.

Asian LNG spot prices are now at their lowest level since May 2016 and close to the lowest point in Refinitiv records going back to 2010 of $4.00 per mmBtu, which was reached in April 2016.

They are also lower than the European natural gas hub price in the Netherlands and Britain, which usually trade at a premium to spot Asian LNG prices. The last time this happened was in January and February of 2015, according to Refinitiv Eikon data.

There were two transactions completed in the Platts market on close (MOC) window, both cargoes to India.

The first one was sold by Vitol to Gunvor for Indian west coast delivery at the start of May for $4.55 per mmBtu. Vitol also sold to Glencore a cargo to Dahej terminal for the end of May at $4.75 per mmBtu.

In Europe, prices were heard at discounts of 20 cents to month-ahead Dutch gas prices at the TTF hub, which were at around $4.98 per mmBtu on Thursday.

Deliveries into North West Europe have jumped to 67 cargoes, or 4.24 million tonnes, this month from 54 cargoes in January, which was a record high for the region since Refinitv Eikon data began in 2013.

The influx has helped to halve prices at both the Dutch and British hubs since their peaks in September.

The market has been inundated with supplies coming onstream from the United States, Russia and Australia. In addition Egypt, which has had to import LNG in previous years due to gas shortages, has started to ramp up its exports.

A cyclone heading for north western Australia may disrupt LNG loading there, according to Kpler, a shipping intelligence company.

Vessels have been cleared at Dampier, loading point for Woodside’s Pluto and North West Shelf LNG, and Ashburton, the loading point for Chevron’s Wheatstone LNG, according to Pilbara Port Authority.

WASHINGTON (Reuters) – The International Monetary Fund supports the U.S. Federal Reserve’s decision to halt its campaign to raise interest rates as a prudent move amid economic uncertainty, IMF spokesman Gerry Rice said on Thursday.

“Given the range of global uncertainties facing the U.S. economy, we support the Fed’s decision to be patient in determining future changes to the Federal Funds rate,” Rice told a regular biweekly news conference. “The Federal Reserve’s continued adherence to the principles of data dependence and clear communication, we believe, will help to minimize any market disruptions and spillovers from its policy decisions.”

The U.S. Federal Reserve on Wednesday brought its three-year drive to tighten monetary policy to an abrupt end, abandoning projections for any interest rate hikes this year amid signs of an economic slowdown, and said it would halt the steady decline of its balance sheet in September.

WASHINGTON (Reuters) – The International Monetary Fund is still awaiting guidance from its members on whether to recognize Juan Guaido as Venezuela’s leader, IMF spokesman Gerry Rice said on Thursday, adding that there is no schedule for an IMF board meeting to decide the issue.

Rice told an IMF news briefing that there is still no clarity on Venezuela’s leadership situation and any shift in the Fund’s recognition of the government will be guided by its 189 member countries and the international community and “views are still being formed.”

Another Washington-based multilateral institution, the Inter-American Development Bank, last week replaced the representative of Venezuelan President Nicolas Maduro with an economist backed by Juan Guaido, a major setback for the Maduro government.

FILE PHOTO: Algeria’s President Abdelaziz Bouteflika looks at journalists after casting his ballot during the parliamentary election in Algiers, Algeria, May 4, 2017. REUTERS/Zohra Bensemra/File Photo

March 21, 2019

By Lamine Chikhi and Aidan Lewis

ALGIERS/CAIRO (Reuters) – Protests that brought hundreds of thousands onto the streets in Algeria over the past month led President Abdelaziz Bouteflika to scrap plans to run for a fifth term.

He postponed an election originally set for April and announced that experts would oversee a transition to a “new system” in coming months. Protesters say this is not enough.

WHAT CAUSED THE PROTESTS?

The immediate cause was Bouteflika’s candidacy. Calls for protests spread after it was confirmed on Feb. 10. Mass rallies began on Feb. 22, and numbers rose over the following two Fridays. After Bouteflika abandoned plans to stand but stopped short of stepping down — raising the prospect that he would stay in power for the rest of the year — the protests swelled.

More broadly, protests drew on frustration among millions of Algerians who feel politically and economically excluded, and resentment against an aging and secretive elite that has controlled Algeria since independence from France in 1962.

President since 1999, Bouteflika became a symbol of an independence generation that clung to power. He oversaw a return to stability after a civil war in the 1990s but in his second decade in power was incapacitated and mostly absent from public life, fuelling a sense of drift and decline.

Plans to diversify the economy away from oil stalled in a sclerotic system many saw as corrupt and riven with cronyism.

HOW DID BOUTEFLIKA SURVIVE SO LONG?

Major Islamist groups were discredited by the 1990s war and along with a liberal opposition were coopted or excluded when it ended. As the ruling National Liberation Front (FLN) reasserted itself, political apathy set in and election turnouts dropped.

When uprisings swept the region in 2011, Algeria used a heavy security and oil money to curtail demonstrations.

There were frequent local protests, but these demanded state resources, not political change. Factional battles played out in the domestic media, relatively free by regional standards. Then, as now, neither ruling elite factions nor Bouteflika and his entourage appeared able to agree on a succession plan.

WHO HAS BEEN RUNNING THE COUNTRY?

Bouteflika has rarely been seen in public since suffering a stroke in 2013, but by then he had already sidelined or outlived the generals who brought him to power. General Mohamed “Toufik” Mediene, head of military intelligence and the man widely seen to be the real center of power in Algeria, departed in 2015.

While the army remained Algeria’s most powerful institution, an informal clique around the presidency amassed more influence, including Bouteflika’s younger brother Said. An emerging business elite profiting from surging oil income also benefited.

WHAT ARE THE POSSIBLE SCENARIOS NOW?

Bouteflika announced that an “independent and inclusive” national conference would draft and new constitution and set a date for elections, and should conclude its work by the end of the year. An interim, technocratic government is being formed.

But this plan has been cast into doubt as Bouteflika’s position has weakened. Protesters want him to step down when his five-year term ends in April and say their goal is sustain pressure and prevent infiltration from “Bouteflika’s system”.

Chief of staff Gaed Salah has said the army should take responsibility for solving the crisis but so far it has been waiting in the wings. The army is more reluctant to intervene directly than in the past. Its decision to cancel parliamentary elections in 1992 that Islamists were poised to win triggered the conflict that left up to 200,000 people dead.

Islamism is in decline, and a new leader may come from the political mainstream. Ahmed Benbitour, a former prime minister, and Mustapha Bouchachi, a rights activist and lawyer, are among those emerging as protest leaders.

WHAT CHALLENGES DO PROTESTERS FACE?

Protesters are trying to remain peaceful. From the start, they have worried that factions within the security forces may provoke violence to discredit protesters, or that demonstrations could turn violent when protesters’ demands are not met.

Another challenge is to find leaders with enough experience and broad support — those who served under Bouteflika may be discredited in the eyes of protesters.

Protesters fear that factions holding power and associated patronage networks will look to survive even as they abandon Bouteflika. Most observers believe that while Bouteflika and his clique will leave power, the system around them will remain.

WHAT’S AT STAKE?

Algeria is Africa’s biggest country by landmass and has a population of more than 40 million. It is a major oil and gas producer and OPEC member, and a top supplier of gas to Europe.

Western states see Algeria as a counter-terrorism partner. It is a significant military player in North Africa and the Sahel, and diplomatically involved in crises in Mali and Libya.

Algeria also backs the Polisario Front independence movement in Western Sahara, in opposition to its neighbor Morocco.

FILE PHOTO: A man passes by the corner stone on the Federal Reserve Bank of New York in the financial district in New York City, U.S., March 4, 2019. REUTERS/Brendan McDermid

March 21, 2019

NEW YORK (Reuters) – The average borrowing cost for U.S. banks to borrow excess reserves from each other rose above what the Federal Reserve pays on excess reserves for the first time ever on Wednesday, New York Federal Reserve data released on Thursday showed.

The average or “effective” federal funds rate came in at 2.41 percent on Wednesday, higher than the 2.40 percent interest rate the U.S. central bank pays on the excess reserves that banks leave with it.

FILE PHOTO: A man passes by the corner stone on the Federal Reserve Bank of New York in the financial district in New York City, U.S., March 4, 2019. REUTERS/Brendan McDermid

March 21, 2019

NEW YORK (Reuters) – The average borrowing cost for U.S. banks to borrow excess reserves from each other rose above what the Federal Reserve pays on excess reserves for the first time ever on Wednesday, New York Federal Reserve data released on Thursday showed.

The average or “effective” federal funds rate came in at 2.41 percent on Wednesday, higher than the 2.40 percent interest rate the U.S. central bank pays on the excess reserves that banks leave with it.

Serbian President Aleksandar Vucic poses during an interview with Reuters in Belgrade, Serbia, September 13, 2018. REUTERS/Djordje Kojadinovic

March 21, 2019

By Aleksandar Vasovic and Ivana Sekularac

BELGRADE (Reuters) – The failure to revive talks between Serbia and Kosovo on normalizing relations could destabilize the Western Balkan region still recovering from the wars of the 1990s, Serbian President Aleksandar Vucic said on Thursday.

Twenty years after NATO bombed the now-defunct Yugoslavia to halt Serbia’s brutal crackdown on Albanians in Kosovo, its former southern province, talks are stalled.

Albanian-majority Kosovo declared independence in 2008 and won recognition from the United States and most EU countries, but not Serbia or its big power patron Russia, and some 4,000 NATO troops remain to safeguard peace in the tiny country.

Both countries must fully normalize ties, before either could progress further on their way to join the European Union.

“Every day of delays could create conditions in which one spark could set the region on fire. The Western countries should know that,” Vucic told Reuters in an interview.

“That is the danger … when national sentiments are stoked.”

In response to Serbia’s bid to prevent Kosovo’s membership in international organizations, Pristina imposed 100 percent tariffs on goods imported from Serbia, something that could cost the Serbian economy 600 million euros in one year, around 0.4 percent of GDP.

To restore the dialogue, Serbia wants those taxes abolished, a move supported by the EU and the United States.

What any settlement could look like is unclear. Both Vucic and Kosovo President Hashim Thaci have floated ideas about a “correction of borders” or “delimitation” – terms interpreted by analysts as land swaps.

The West sees the integration of the entire region into the EU and NATO as a way to maintain regional stability.

“Our accession to the European Union depends on the dialogue with Pristina and whether one day we will manage to reach a deal,” Vucic said, adding that he expected Germany, France or the EU to become more active in the negotiating process.

“I think we will see some of their initiatives in the near future,” he said, without elaborating.

Vucic, in power since 2012, said he had no plan to resign or call early elections, something demanded by thousands in opposition protests that started last December accusing his government of cronyism, corruption and stifling media freedoms, something he denies.

FILE PHOTO: The Ericsson logo is seen at the Ericsson’s headquarters in Stockholm, Sweden June 14, 2018. Picture taken June 14, 2018. REUTERS/Olof Swahnberg

March 21, 2019

By Joanna Plucinska

WARSAW (Reuters) – Poland will fall behind the rest of Europe on 5G unless it makes regulatory changes, an Erissson executive told Reuters, raising fresh concerns over the country’s plans as it considers excluding China’s Huawei from its 5G rollout.

Swedish telecoms equipment maker Ericsson is among the companies that could benefit should Poland bar Huawei from its 5G plans over concerns about cybersecurity vulnerabilities in the Chinese company’s equipment.

A number of European governments, including the Czech Republic and Poland, have raised concerns about Huawei’s role in the next generation of mobile connectivity, with the European Union is also considering proposals to exclude Chinese firms from 5G networks.

“Ericsson is ready. But there needs to be spectrum made available and this should be made available in 2020 by the latest, otherwise Poland can really fall behind Europe,” said Martin Mellor, Ericsson’s manager for Poland.

Finland’s Nokia and Ericsson are the leading European contenders to provide 5G equipment for Poland, the largest economy in eastern Europe.

As well as freeing up spectrum frequencies for 5G, the Polish government needs to ease regulations for building new sites for the next-generation network, Mellor said.

“There may be the need to have a denser network, so you can see lamp posts, bus stations, street furniture becoming part of the 5G network,” he said. “It would be beneficial if it was easier to build on these sites.”

Poland also needs to recalibrate power density limits, which Mellor said are among the most limited in Europe, to allow base stations to transmit enough electricity to make the 5G network function.

The government has yet to announce a decision on Huawei and finding viable replacements for Chinese telecoms equipment will be challenging, Poland’s deputy digital minister Wanda Buk told Reuters.

Telecoms industry and government officials told Reuters that Ericsson’s equipment is considered significantly more expensive than Chinese alternatives, which is why most operators in Poland opted for Huawei-produced equipment.

FILE PHOTO: City workers walk past the Bank of England in the City of London, Britain, March 29, 2016. REUTERS/Toby Melville

March 21, 2019

By Andy Bruce and David Milliken

LONDON, March 21 – The Bank of England kept interest rates steady on Thursday and said most businesses felt as ready as they could be for a no-deal Brexit that would likely hammer economic growth and jobs.

The BoE said its nine rate-setters voted unanimously to keep interest rates on hold at 0.75 percent, just days before the world’s fifth-biggest economy could leave the European Union without a deal to smooth its way.

“The economic outlook will continue to depend significantly on the nature and timing of EU withdrawal,” the BoE said.

The central bank again said rates could move in either direction if there is a no-deal Brexit, as a sharp fall in the value of the pound could generate inflation pressure in addition to the broader economic shock.

Separately, the BoE published a survey of just under 300 companies that showed around 80 percent feel they are “ready” for a no-deal, no-transition Brexit — up from 50 percent in January.

A disorderly Brexit on March 29 remains possible as Prime Minister Theresa May waits to hear from Brussels on her request to delay Britain’s departure from the European Union by three months, to allow her to get her deal though parliament.

Many companies reported that there were “limits to the degree of readiness” that were possible in advance of a possible no-deal scenario, the BoE said.

“Indeed, the March survey also showed that respondents – even those that felt ‘ready’ – still expected output, employment and investment over the next 12 months to be significantly weaker under a ‘no deal, no transition’ Brexit,” the BoE said.

The minutes from the March meeting of the Monetary Policy Committee (MPC) showed little change in tone since the central bank published its latest economic outlook in February.

Brexit uncertainty had created volatility in British asset prices and sterling, and was hurting businesses confidence and investment, the central bank said.

“The news in economic data has been mixed, but the MPC’s February … projections appear on track,” the minutes said.

“The broad-based softening in global GDP and trade growth has continued. Global financial conditions have eased, in part supported by announcements of more accommodative policies in some major economies.”

The U.S. Federal Reserve on Wednesday brought its three-year drive to tighten monetary policy to an abrupt end, abandoning projections for any interest rate hikes this year amid signs of an economic slowdown.

And earlier this month, the European Central Bank announced new stimulus measures to prop up a still-fragile economy, promising to put off raising rates and to give banks access to more multi-year loans.

Last August the BoE raised rates for only the second time since before the global financial crisis.

On Thursday it stuck to plans for a further gradual increases in borrowing costs, but only once it has a clearer idea of what Brexit will mean for the world’s fifth-biggest economy.

Some members of the Monetary Policy Committee, including Governor Mark Carney, have said they would probably vote to cut rates if Britain leaves without a deal.

Most economists polled by Reuters expect rates to rise later this year if Brexit goes smoothly.

Private-sector business surveys suggest the economy has slowed sharply in the run-up to Brexit and as the world economy lost momentum.

Inflation in Britain is running just below the BoE’s 2 percent target but pay growth is running at its highest level in more than 10 years. The BoE said signs of strength in inflation pressure in the labor market were “notable”.

FILE PHOTO: A general view of the Norwegian central bank in Oslo, Norway March 6, 2018. REUTERS/Gwladys Fouche

March 21, 2019

By Nerijus Adomaitis and Terje Solsvik

OSLO (Reuters) – Norway’s central bank raised its main interest rate on Thursday, as expected, and said its next hike may come earlier then previously planned, strengthening the crown currency against the euro.

The bank raised its key policy rate to 1.0 percent from 0.75 percent previously, in line with the forecast of 23 out of 26 economists in a Reuters poll.

Norges Bank’s approach stands in contrast to those of the U.S. Federal Reserve, the European Central Bank and others in Europe, which are keeping rates on hold due to rising uncertainty about the prospects for the global economy.

“Our current assessment of the outlook and balance of risks suggests that the policy rate will most likely be increased further in the course of the next half-year”, said Governor Oeystein Olsen.

“The rate path shows a greater probability of a rate hike than of an unchanged rate in June,” he added.

The new rate path shows the bank sees rates averaging 1.1 percent in 2019, against 1.0 percent seen previously, and 1.6 percent in 2020, against 1.4 percent before.

Following the unanimous decision, Norway’s currency, the crown, surged over one percent against the euro to trade at 9.6010 at 0913 GMT and was pushing toward its biggest one-day gain in over a year.

“As expected Norges Bank hiked the key rate today. The rate path was lifted in the front and indicates the next hike already at the June meeting,” Nordea Markets analyst Joachim Bernhardsen said in a note.

Oil-rich Norway stands alone among other developed economies in tightening monetary policy, thanks to rising crude prices and higher-than-anticipated economic growth and inflation.

On Wednesday, the U.S. Federal Reserve brought its three-year drive to tighten monetary policy to an abrupt end, abandoning projections for any interest rate hikes this year amid signs of an economic slowdown, and saying it would halt the steady decline of its balance sheet in September.

On Thursday, the Swiss National Bank kept in place its ultra-loose monetary policy, as anticipated by economists, and later in the day the Bank of England is also expected to announce unchanged rates amid continued uncertainty over Brexit.

Norges Bank raised its growth forecasts for 2019 and 2020 while predicting a sharper slowdown in the two following years, from 2.7 percent expansion this year to just 1.1 percent growth in 2022.

“How to balance global vs domestic factors? Front-load rate hikes in the path and take a wait-and-see approach regarding the long-end. Well done Norges Bank!” tweeted Erica Blomgren, fixed income strategist at SEB.

FILE PHOTO: Sign of the European central Bank (ECB) is seen ahead of the news conference on the outcome of the Governing Council meeting, outside the ECB headquarters in Frankfurt, Germany, March 7, 2019. REUTERS/Kai Pfaffenbach

March 21, 2019

FRANKFURT (Reuters) – The European Central Bank has launched a rare attack on EU governments for failing to give it ultimate oversight of clearing houses processing trillions of euros worth of securities.

Dominated by the London Stock Exchange, the clearing of financial contracts denominated in euros has become a political battleground since Britain voted to leave the European Union in 2016, with the bloc’s authorities vying to gain oversight of this key market on both sides of the Channel.

Under a provisional deal struck this month, EU governments and lawmakers gave the Paris-based European Securities and Markets Authority (ESMA) and national supervisors the final word in supervising central clearing counterparties (CCPs) based in the EU.

But the ECB said in a letter published late on Wednesday this undermined its ability to “monitor and assess risks posed by CCPs” and sought to block a change to its own rules that would force it to follow ESMA’s decisions on the matter.

“Under these amendments, the ECB would not enjoy regulatory powers in respect of CCPs established within the European Union,” ECB President Mario Draghi said in the letter to George Ciamba, chair of the EU’s General Affairs Council.

This body, which prepares the meetings of the European Council of EU government leaders, was expected to decide on the proposed changes next week.

If the ECB is successful in blocking the amendments to its statute, ESMA would still likely gain oversight of clearing houses but its decisions would not be binding on the ECB.

This would limit the ECB’s responsibility and possibly also leave the burden of providing liquidity to clearing houses in times of stress to the euro zone’s national central banks.

In the letter, also sent to the head of the EU’s parliament and other authorities, the ECB’s Governing Council withdrew its 2017 recommendation to change its statute with respect to clearing.

“One of the overarching objectives of the Recommendation cannot be fulfilled, namely, to ensure that the Eurosystem would have binding powers to monitor and assess risks posed by CCPs,” Draghi said in the letter.

The head of the European Parliament’s economic committee, Roberto Gualtieri, struck a sympathetic tone at a hearing on Thursday, blaming the European Council and Commission for failing to take on board the ECB’s concerns.

FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., March 20, 2019. REUTERS/Brendan McDermid

March 21, 2019

By Amy Caren Daniel

(Reuters) – U.S. stock index futures were subdued on Thursday, a day after the Federal Reserve abandoned projections for any interest rate hikes this year amid signs of an economic slowdown.

At the conclusion of its two-day monetary policy meeting on Wednesday, the central bank brought its three-year drive to tighten monetary policy to an abrupt end, and released details of a plan to end the monthly reduction of its balance sheet.

Shares of U.S. lenders, which are sensitive to interest rates, took a hit after the statement.

“The decision by the Fed to go all in on the dovish pivot caught markets off guard, with investors expecting a more cautious and gradual approach from a central bank that typically errs on the more hawkish side,” Craig Erlam, senior market analyst at Oanda in London, wrote in a note.

“Whether this is a sign that policy makers are genuinely concerned about the economy in 2019 or that they’ve finally bowed to external pressure, it’s certainly a bold move.”

A dovish Fed and hopes of a resolution to the ongoing trade war between United States and China have spurred a rally in stocks this year, with the S&P 500 now about 4 percent away from its record closing high in September.

Investors will now keep a close watch on trade talks between the United States and China as U.S. trade delegates travel to Beijing to resume negotiations.

President Donald Trump warned on Wednesday that Washington may leave tariffs on Chinese goods for a “substantial period” to ensure that Beijing complies with any trade agreement.

At 6:37 a.m. ET, Dow e-minis were down 18 points, or 0.07 percent. S&P 500 e-minis were down 0.5 points, or 0.02 percent and Nasdaq 100 e-minis were up 10.5 points, or 0.14 percent.

Among stocks, Micron Technology Inc rose 3.6 percent after the chipmaker said it sees a recovery in the memory chip market coming and reported a quarterly profit that beat estimates.

Boeing Co slipped 0.4 percent after pressure mounted on the world’s largest planemaker in Washington as U.S. lawmakers called for executives to testify about two crashed 737 MAX jets.

Economic data on tap includes initial claims for state unemployment benefits, which are expected to have fallen to 225,000 in the week ended March 16 from 229,000 in the previous week. The data is due at 8:30 a.m. ET.

FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., March 20, 2019. REUTERS/Brendan McDermid

March 21, 2019

By Amy Caren Daniel

(Reuters) – U.S. stock index futures were subdued on Thursday, a day after the Federal Reserve abandoned projections for any interest rate hikes this year amid signs of an economic slowdown.

At the conclusion of its two-day monetary policy meeting on Wednesday, the central bank brought its three-year drive to tighten monetary policy to an abrupt end, and released details of a plan to end the monthly reduction of its balance sheet.

Shares of U.S. lenders, which are sensitive to interest rates, took a hit after the statement.

“The decision by the Fed to go all in on the dovish pivot caught markets off guard, with investors expecting a more cautious and gradual approach from a central bank that typically errs on the more hawkish side,” Craig Erlam, senior market analyst at Oanda in London, wrote in a note.

“Whether this is a sign that policy makers are genuinely concerned about the economy in 2019 or that they’ve finally bowed to external pressure, it’s certainly a bold move.”

A dovish Fed and hopes of a resolution to the ongoing trade war between United States and China have spurred a rally in stocks this year, with the S&P 500 now about 4 percent away from its record closing high in September.

Investors will now keep a close watch on trade talks between the United States and China as U.S. trade delegates travel to Beijing to resume negotiations.

President Donald Trump warned on Wednesday that Washington may leave tariffs on Chinese goods for a “substantial period” to ensure that Beijing complies with any trade agreement.

At 6:37 a.m. ET, Dow e-minis were down 18 points, or 0.07 percent. S&P 500 e-minis were down 0.5 points, or 0.02 percent and Nasdaq 100 e-minis were up 10.5 points, or 0.14 percent.

Among stocks, Micron Technology Inc rose 3.6 percent after the chipmaker said it sees a recovery in the memory chip market coming and reported a quarterly profit that beat estimates.

Boeing Co slipped 0.4 percent after pressure mounted on the world’s largest planemaker in Washington as U.S. lawmakers called for executives to testify about two crashed 737 MAX jets.

Economic data on tap includes initial claims for state unemployment benefits, which are expected to have fallen to 225,000 in the week ended March 16 from 229,000 in the previous week. The data is due at 8:30 a.m. ET.

Now he is president, they and industry bosses have changed tack, pledging support for the popular new leader and his plans to revive the economy from the bottom up.

Bank bosses have used the run-up to the banking convention in Acapulco beginning on Thursday to signal approval for Lopez Obrador’s plans to tackle chronic inequality via welfare handouts, ramp up financial inclusion and lift economic growth.

“The financial sector has been and will continue to be committed to Mexico’s development, which is why he celebrate and go along with the measures … announced by the Mexican government,” Marcos Martinez, head of the Mexican banking association (ABM), said at a recent event with Lopez Obrador.

Martinez and other bankers hope the president will meet pledges to tackle corruption and gang violence in Latin America’s No. 2 economy, buttressing growth with the rule of law.

Still, skepticism about his economic credentials is widespread in business circles. So far executives have reasoned they have more to gain by working with him than picking a fight with a president whose approval ratings run close to 80 percent.

Lopez Obrador, who took office in December, wiped billions of the value of Mexican financial assets when he canceled a new Mexico City airport on Oct. 29. Proposals floated by his MORENA party in Congress to curb bank fees also spooked markets.

Yet even as he rolls out welfare schemes across Mexico, he has promised to run a tight budget to protect the country’s investment-grade credit rating and says he can achieve average annual growth of 4 percent during his six-year term.

At this week’s conference in Acapulco, Mexico’s banks would likely deliver a clear message to the president that they will work with him to achieve his goals, said a senior financial industry source, speaking on condition of anonymity.

That could unlock funds for Lopez Obrador’s plan to create jobs via infrastructure spending, and complement the goal of employers’ federation COPARMEX to lift the spending power of the lowest paid by tripling the minimum wage by 2024.

Cooperating with Lopez Obrador to encourage an expansion of the Mexican middle class could become a major driver of growth, and help curb the president’s worst instincts, a senior industrialist said, speaking on condition of anonymity.

Stating Mexico had “more financial resources than there are projects”, the new head of Mexico’s powerful CCE business lobby, Carlos Salazar, said last month it would work to end extreme poverty by the end of Lopez Obrador’s term.

By then, the ABM aims to get 30 million more people to use banking services – nearly three-quarters of those estimated to be without an account – and to support domestic demand by boosting lending to small businesses, homebuyers and families.

Deputy finance minister Arturo Herrera told Reuters the government would push hard on financial inclusion at the banking convention, where Lopez Obrador is due to speak on Friday.

However, for the president to make the most of the goodwill in boardrooms, he must work harder to undo the damage caused by poor decisions such as the scrapping of the airport, said Gustavo de Hoyos, head of employers’ lobby COPARMEX.

Business wanted to invest, but right now, the government scored only about “50 percent” on investor confidence, he added.

“If the president and his team can take advantage of these strengths,” de Hoyos told Reuters, “I think we could see really big progress in the course of this administration.”

Now he is president, they and industry bosses have changed tack, pledging support for the popular new leader and his plans to revive the economy from the bottom up.

Bank bosses have used the run-up to the banking convention in Acapulco beginning on Thursday to signal approval for Lopez Obrador’s plans to tackle chronic inequality via welfare handouts, ramp up financial inclusion and lift economic growth.

“The financial sector has been and will continue to be committed to Mexico’s development, which is why he celebrate and go along with the measures … announced by the Mexican government,” Marcos Martinez, head of the Mexican banking association (ABM), said at a recent event with Lopez Obrador.

Martinez and other bankers hope the president will meet pledges to tackle corruption and gang violence in Latin America’s No. 2 economy, buttressing growth with the rule of law.

Still, skepticism about his economic credentials is widespread in business circles. So far executives have reasoned they have more to gain by working with him than picking a fight with a president whose approval ratings run close to 80 percent.

Lopez Obrador, who took office in December, wiped billions of the value of Mexican financial assets when he canceled a new Mexico City airport on Oct. 29. Proposals floated by his MORENA party in Congress to curb bank fees also spooked markets.

Yet even as he rolls out welfare schemes across Mexico, he has promised to run a tight budget to protect the country’s investment-grade credit rating and says he can achieve average annual growth of 4 percent during his six-year term.

At this week’s conference in Acapulco, Mexico’s banks would likely deliver a clear message to the president that they will work with him to achieve his goals, said a senior financial industry source, speaking on condition of anonymity.

That could unlock funds for Lopez Obrador’s plan to create jobs via infrastructure spending, and complement the goal of employers’ federation COPARMEX to lift the spending power of the lowest paid by tripling the minimum wage by 2024.

Cooperating with Lopez Obrador to encourage an expansion of the Mexican middle class could become a major driver of growth, and help curb the president’s worst instincts, a senior industrialist said, speaking on condition of anonymity.

Stating Mexico had “more financial resources than there are projects”, the new head of Mexico’s powerful CCE business lobby, Carlos Salazar, said last month it would work to end extreme poverty by the end of Lopez Obrador’s term.

By then, the ABM aims to get 30 million more people to use banking services – nearly three-quarters of those estimated to be without an account – and to support domestic demand by boosting lending to small businesses, homebuyers and families.

Deputy finance minister Arturo Herrera told Reuters the government would push hard on financial inclusion at the banking convention, where Lopez Obrador is due to speak on Friday.

However, for the president to make the most of the goodwill in boardrooms, he must work harder to undo the damage caused by poor decisions such as the scrapping of the airport, said Gustavo de Hoyos, head of employers’ lobby COPARMEX.

Business wanted to invest, but right now, the government scored only about “50 percent” on investor confidence, he added.

“If the president and his team can take advantage of these strengths,” de Hoyos told Reuters, “I think we could see really big progress in the course of this administration.”

FILE PHOTO: Chairperson of European Banking Authority (EBA) Andrea Enria attends a debate with the European Parliament’s Economic and Monetary Affairs Committee in Brussels, Belgium September 26, 2016. REUTERS/Yves Herman

March 21, 2019

FRANKFURT (Reuters) – A new banking giant resulting from a merger must have extra capital and a legal structure that allows authorities to wind it down if it fails, the European Central Bank’s top watchdog said on Thursday.

“If a bank becomes too big, complex or interconnected… it needs to have additional capital,” Andrea Enria said when asked in the European Parliament about a possible tie-up between Germany’s Deutsche Bank and Commerzbank.

“Even if you become big you should be resolvable so the banks should prove that they have structures that are not preventing a smooth resolution in case of crisis,” he added.

“These are the two main safeguards that you need to look at when you look at mergers,” Enria said.

FILE PHOTO: A Volkswagen logo is seen on a new car model at the 89th Geneva International Motor Show in Geneva, Switzerland March 5, 2019. REUTERS/Denis Balibouse

March 21, 2019

FRANKFURT (Reuters) – Volkswagen and Swedish battery maker Northvolt and other companies as well as science labs are joining forces in battery cell research, the German carmaker said in a statement on Thursday.

Starting in early 2020, the so-called European Battery Union (EBU) aims to accumulate know-how on battery cell production, including research on raw materials, cell technology but also the recycling of used batteries.

“All the partners will step up their investments as a result of the planned additional research activities,” Volkswagen said, adding that they could seek funds from the German economy ministry.

Germany has earmarked 1 billion euros ($1.14 billion) to support a consortium looking to produce electric car cells and plans to fund a research facility to develop next-generation solid-state batteries.

More than 30 companies have applied for the program to support the production of battery cells, the Economy Ministry said earlier this month.

LONDON, (Reuters) – British retail sales unexpectedly kept up a robust pace of expansion last month, after unusually warm weather boosted sales, reinforcing the sector’s role as a bright spot for the economy ahead of Brexit.

Annual retail sales growth slowed only a fraction to 4.0 percent in February after sales volumes grew at their fastest in more than two years in January, the Office for National Statistics said on Thursday.

Economists polled by Reuters had forecast a slowdown in sales growth to 3.3 percent.

Consumer spending has been a source of strength for the British economy at a time when businesses say that Brexit uncertainty is forcing them to postpone investment and a slower global economy is hurting export demand.

On Wednesday Prime Minister Theresa May asked for a three-month delay to Brexit on Wednesday to buy time to get her twice-rejected departure deal though parliament, but the request faced immediate resistance from the European Commission.

Sales volumes in February alone rose by 0.4 percent versus a poll forecast of a decline, after jumping by 0.9 percent in January, while annual sales growth for the three months to February was its strongest in over two years at 3.7 percent.

Falling inflation, a steady rise in wages and the lowest unemployment since 1975 have all boosted household incomes over the past year, though after inflation wages are still below their peak before the financial crisis.

Last year overall British economic growth slowed to its weakest since 2012 and the Bank of England – which is predicted to keep rates on hold later on Thursday – forecasts the weakest growth for a decade this year.

The ONS said that unusually warm weather in February had boosted spending at garden centres and on sporting equipment, sales fell at supermarkets and in clothing stores due to an end of January’s seasonal promotions.

Earlier on Thursday, major British clothing chain Next reported a small fall in annual profit on Thursday, hurt by lower store sales, and forecast another decline for 2019-2020.

Figures from the British Retail Consortium at the start of the month had suggested that annual sales growth at bigger high-street stores slowed in February, with the trade association blaming Brexit.

Separate figures from the ONS on Thursday showed the government broadly on track to meet updated borrowing goals for the 2018/19 financial year, as the strong labor market boosted income tax revenue.

Public borrowing for February, the eleventh month of the tax year, fell to 0.2 billion pounds from 1.2 billion pounds a year earlier, below economists’ average forecast of 0.6 billion pounds in a Reuters poll.

With just one month remaining of the current financial year, government borrowing totals 23.1 billion pounds, down 44 percent from the same point in the 2017/18 tax year, though these figures are likely to be revised further.

FILE PHOTO: Catherine McGuinness, Chairman of the Policy and Resources Committee of the City of London Corporation, poses for a photograph in London, Britain, January 17, 2018. Picture taken January 17, 2018. REUTERS/Hannah McKay

March 21, 2019

LONDON (Reuters) – Extending Britain’s departure date from the European Union would only be a “sticking plaster” if deep-seated issues are left unresolved, City of London financial district chief Catherine McGuinness said on Thursday.

It appeared that financial services have been “thrown under a bus” in terms of Britain’s efforts to secure a divorce settlement with the bloc, she told a City & Financial conference.

UK financial services minister John Glen told the conference that the sector had every right to feel frustrated with Britain’s failure so far to secure a divorce settlement with just a week to go before Brexit Day.

The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, March 12, 2019. REUTERS/Staff

March 21, 2019

(Reuters) – European stock markets opened lower on Thursday, as the impact on banks of an accommodative policy message from the U.S. Federal Reserve outweighed any broader lift to sentiment from its abandoning of further interest rate hikes this year.

The pan-European STOXX 600 index dipped 0.3 percent, driven by falls in Paris, Madrid and Frankfurt that contrasted with a strong reaction on Asian markets to the Fed’s statement and news conference.

Germany’s DAX led with a 0.5 percent fall, weakened by a 1 percent loss for bank stocks, which tend to suffer when expectations for future interest rates fall.

Banking shares across Europe had also risen earlier this week on signs of a merger between Deutsche Bank and Commerzbank.

A bright spot were semiconductor makers, boosted by Micron Technology’s upbeat outlook for the sector, which soothed worries about falling demand for smartphones. Infineon and STMicro were both up 2 percent.

EssilorLuxottica’s shares slumped to the bottom of the CAC 40 and the STOXX 600 on new tensions in its boardroom as the top shareholder and executive chairman accused the Franco-Italian group’s executive vice chairman of a power grab.

Investors punished HeidelbergCement, the world’s second-largest cement maker, after its results and Swedish construction group Skanska fell 3.2 percent after it said it would not reach a target for operating margins.

London’s FTSE 100 index was the only index to buck the trend, gaining 0.3 percent as miners benefited from higher copper prices on the back of a weaker dollar.

The market’s internationally-focussed blue chip stocks also tend to gain on falls for sterling, which was suffering again from Britain’s failure to find a clear route out of the European Union before a March 29 deadline.

Among its midcaps, a profit warning from British precision engineering group Renishaw Plc due to a slowdown in Asia drove its shares 14 percent lower.

The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, March 11, 2019. REUTERS/Staff

March 21, 2019

By Huw Jones

LONDON (Reuters) – Stock exchanges in Europe are not harming markets or gouging customers with the fees they charge for data, an industry-commissioned report said on Thursday.

The report from consultants Oxera for the Federation of European Securities Exchanges (FESE) wants to counter accusations from investment funds that “monopoly” bourses were continually hiking fees for market data to lift profits.

Investment firms have called on the EU’s markets watchdog ESMA to review market data fees charged by exchanges, saying they keep on rising despite falling costs of computing and data storage.

Oxera’s report concludes that “economic analysis suggest that the current charging structures for market data are unlikely to have detrimental effects on market outcomes for investors.”

FESE said that while fees have been “challenged by some”, the report showed that aggregate market data revenues have risen by only 1 percent a year, from 230 million euros ($261.2 million) in 2012 to 245 million euros in 2018.

“Costs have remained stable over the last five years,” said Rainer Riess, FESE director general.

Policymakers should be very mindful that any changes do not harm how prices of shares are formed, Riess added.

TRANSATLANTIC

Investment funds face scrutiny over their own fees charged customers and want to cut costs.

They have to buy data to help show regulators that they are obtaining the best share prices on behalf of investors in a region where many platforms trade the same stocks.

The Alternative Investment Management Association, Managed Funds Association, Britain’s Investment Association and two German funds bodies BVI and BAI, asked ESMA in December to enforce an EU securities law that requires market data to be sold on a “reasonable commercial basis”.

The bloc’s competition officials are also facing pressure to intervene.

In the United States the Securities and Exchange Commission repealed two data price changes last May for public feeds for Nasdaq and New York Stock Exchange listed securities for the first time after complaints from asset managers.

The battle across the Atlantic has led to market participants like Fidelity Investments and hedge fund Citadel to back a new, low cost Members Exchange bourse to compete with NYSE.

FESE said the real issue was not prices but the “often very low quality” of data from off-exchange or “dark” trading platforms.

There has been talk for many years of a “consolidated tape” or a single pipe for gathering share prices from different platforms, like in the United States.

FESE said data intermediaries or vendors were already offering a de facto tape for prices on the bulk of so-called “lit” exchanges, where prices and trades are instantly visible.

FILE PHOTO: The logo of Indonesia’s central bank, Bank Indonesia, is seen on a window in the bank’s lobby in Jakarta, Indonesia, September 22, 2016. REUTERS/Iqro Rinaldi

March 21, 2019

By Gayatri Suroyo and Maikel Jefriando

JAKARTA (Reuters) – Indonesia’s central bank, welcoming the Federal Reserve’s forecast of no U.S. rate hikes this year, on Thursday kept its benchmark on hold to maintain financial stability while tweaking some rules to try to encourage more lending.

Bank Indonesia (BI) held its 7-day reverse repurchase rate steady at 6.00 percent, where it has been since November, as expected by all 20 analysts in a Reuters poll.

The decision came hours after the Fed abandoned projections for any rate hikes this year, sending the rupiah up 0.4 percent on Thursday.

Governor Perry Warjiyo told reporters after the meeting that global developments, including the Fed’s latest statement, “will be more positive for capital inflows to emerging markets, including Indonesia.”

BI was one of Asia’s most aggressive central banks last year, raising the benchmark rate six times by 175 basis points to respond to the Fed’s four rate hikes and to counter outflows that kept the rupiah under pressure for most of 2018.

This year, the rupiah has been generally appreciating due to inflows to Indonesia’s equity and bond markets as major central banks around the world turned dovish.

BI still expected one more rate hike by the Fed through 2020, but sees the rupiah being stable this year, Warjiyo said.

“This is a ‘dovish hold’, said Satria Sambijantoro, an economist at Bahana Sekuritas in Jakarta. “BI signaled its readiness to support credit expansion, with tweaks on some macroprudential policy measures to support liquidity in the banking system.”

BI will raise the guidance for where it wants banks to maintain its financing-to-funding ratio to a 84-94 percent range, from 80-92 percent range, effective July 1.

Warjiyo said the measure, which allows banks to manage a slightly higher liquidity ratio without being penalized, was aimed at getting banks to lend more.

LENDING LIFT

Meanwhile, he said BI had also been adding liquidity to the financial system since December through open market operations, estimating the cash injected so far at 459 trillion rupiah ($32.51 billion).

While banks on aggregate had “more than enough” liquidity, he said smaller banks were facing difficulties to expand lending due to funding constraints.

Warjiyo said the new moves would help accelerate lending growth to the upper end of the 10-12 percent outlook in 2019, without hurting stability.

Even so, BI still sees economic growth this year remaining in a range of 5.0-5.4 percent.

The latest measures announced by BI indicated it “was in little hurry to change interest rates,” Capital Economics said, predicting no change in the benchmark rate this year.

In February, the annual inflation rate cooled to 2.57 percent, the slowest in nearly a decade and just above the lower end of BI’s 2.5-4.5 target range for 2019. Warjiyo said inflation will remain within target until the end of the year.

The Philippine central bank, the second Southeast Asian one holding a policy meeting right after the Fed’s, also kept its benchmark rate on hold, as expected.

FILE PHOTO: The logo of Reliance Industries is pictured in a stall at the Vibrant Gujarat Global Trade Show at Gandhinagar, India, January 17, 2019. REUTERS/Amit Dave

March 21, 2019

By Nidhi Verma and Marianna Parraga

NEW DELHI/MEXICO CITY (Reuters) – India’s Reliance Industries is selling fuels to Venezuela from India and Europe to sidestep sanctions that bar U.S.-based companies from dealing with state-run PDVSA, according to trading sources and Refinitiv Eikon data.

Reliance had been supplying alkylate, diluent naphtha and other fuel to Venezuela through its U.S.-based subsidiary before Washington in late January imposed sanctions aimed at curbing the OPEC member’s oil exports and ousting Socialist President Nicolas Maduro.

At least three vessels chartered by the Indian conglomerate supplied refined products to Venezuela in recent weeks, and another vessel carrying gasoil is expected to set sail to the South American nation as well, according to the sources and data.

A Reliance spokesman wrote to Reuters in an email and said: “Reliance is and will remain in compliance with the sanctions and shall work with the concerned authorities.”

He also said “the volume of products supplied to and crude oil imported from Venezuela have not increased.”

Reliance, an Indian conglomerate controlled by billionaire Mukesh Ambani, has significant exposure to the financial system of the United States, where it operates subsidiaries linked to its oil and telecom businesses, among others.

The Indian market is crucial for Venezuela’s economy because it has historically been the second-largest cash-paying customer for the OPEC country’s crude, behind the United States.

Additional sanctions against Venezuela are possible in the future, as U.S. President Donald Trump’s administration has not yet tried to prevent companies based outside the United States from buying Venezuelan oil, a strategy known as “secondary sanctions.”

Refinitiv Eikon trade data shows that Reliance shipped alkylate, a component for motor gasoline, to Venezuela on vessels Torm Mary and Torm Anabel in recent weeks. Those originated in India and passed through the Suez Canal.

It also shipped a gasoline cargo using tanker Torm Troilus to Venezuela and is preparing to send 35,000 tonnes of gasoil in a vessel called Vukovar to the South American nation.

“Reliance is also supplying some products from its Rotterdam storage,” a source familiar with Reliance’s operation said.

PDVSA did not reply to a request for comment.

In a statement last week, Reliance said its U.S. unit has completely stopped all business with PDVSA. Reliance also halted all supply of diluents including heavy naphtha to Venezuela and does not plan to resume such sales until sanctions are lifted, according to the release.

Venezuela has overall imported some 160,000 barrels per day of fuel and diluents for its extra heavy oil output since the U.S. measures were imposed, according to PDVSA and Refinitiv data, below levels prior to the sanctions but still enough to supply gas stations and power plants.

Reliance is among the biggest buyers of Venezuelan oil, although the company has recently said it has not increased crude purchases from Venezuela. In 2012, Reliance signed a 15-year deal to buy between 300,000 to 400,000 bpd of heavy crude from PDVSA.

Ship tracking data obtained by Reuters showed that Reliance’s average purchases from Venezuela were less than 300,000 bpd in 2018 and in the first two months of this year.

Venezuela continues to supply at least some oil to India. A very large crude carrier (VLCC) is anchored off Venezuela’s Jose port waiting to load oil bound for India, and at least six other vessels of the same size are underway to India’s Sikka and Vadinar ports, according to the Refinitiv data.

SHANGHAI (Reuters) – Chinese regulators are close to releasing new “green bond” standards that would exclude polluting fossil fuel projects from corporate financing channels designed to lift environmental standards, people familiar with the matter told Reuters.

Beijing has in recent years promoted new green financing methods to help industry pay for its transition to cleaner modes of growth.

But China’s inclusion of “clean coal” in a 2015 central bank list of technologies eligible for green bonds has put the country at odds with global standards, a point of contention for some international investors and many environmental groups.

Two sources with direct knowledge of the situation say China’s central bank, which regulates financial institution debt issuance and whose 2015 guidelines were adopted by other market regulators, has already revised the eligibility list. One of the people said the list is due to be published later this month. The People’s Bank of China did not immediately respond to Reuters’ request for comment.

“If confirmed, ending the policy of financing coal with green bonds would be a much-needed step in the right direction,” said Liu Jinyan, senior campaigner with environmental group Greenpeace in Beijing.

“With no new coal projects taking money from the green bonds market, those funds can actually accelerate China’s energy transition and green development,” she said.

Of the $42.8 billion worth of green bonds issued in China last year, only $31.2 billion would have met global criteria, according to a report published at the end of February by the Climate Bonds Initiative (CBI), a non-profit group backing green bond standards.

The share of what CBI calls “internationally aligned” green bonds has been steadily increasing as China’s institutions move to align themselves more with global markets.

The PBOC’s revised criteria, however, would not apply to green “enterprise bonds”, which are regulated by the National Development and Reform Commission (NDRC), the state planner, and are primarily issued by state-owned enterprises and unlisted companies.

In its “green industry” catalog of approved environmental sectors, the NDRC in February still included the production and utilization of “clean coal”, allowing coal companies to issue “green enterprise bonds” to finance the installation of low-emission technology.

The NDRC did not immediately respond to request for comment.

Green bonds have already financed a number of big coal projects in China. Tianjin SDIC Jinneng Electric Power Co Ltd issued 200 million yuan ($29.81 million) in commercial paper on the interbank market in mid-2017 to finance a low-emissions coal-fired power plant.

Coal-to-chemical plants have also received billions of yuan in financing through green bonds, despite criticism from environmental groups.

Industry experts say the two-tiered regulatory framework – one under the PBOC and one under the NDRC – means some coal-related projects could still issue green bonds, although access to the most active green finance markets would be restricted.

“Many of the international investors and financiers have publicly announced plans to reduce their coal portfolio,” said Herry Cho, head of sustainable finance for Asia Pacific at ING.

She said the NDRC catalog is already “largely aligned” with international standards, and even includes some categories, such as equipment related to renewable energy and resource recycling, that are not yet included in global guidelines.

Shengzhe Wang, counsel at Hogan Lovells in Shanghai, who has worked on green bonds in the U.K.-China Green Finance Taskforce, said it was unrealistic to expect the sudden exclusion of coal from all green financing in China.

“For the time being perhaps we have to put up with, make a compromise with clean coal,” she said.

While that compromise may limit foreign involvement in the market, Peter Corne, managing partner at legal firm Dorsey & Whitney in Shanghai said green financing was still required to help clean up China’s coal sector.

“I don’t think it necessarily means there will be more coal projects because of it, because there has already been a moratorium for quite some time,” said Corne, who follows China’s environmental policies.

“Coal’s not going to go away, and it will greatly accelerate our progress towards achieving emission goals if we do clean up the coal sector.”

(Reporting by Andrew Galbraith and David Stanway; Editing by Sam Holmes)

Turkish lira banknotes are seen in this picture illustration in Istanbul, Turkey August 14, 2018. REUTERS/Murad Sezer/Illustration

March 21, 2019

ANKARA (Reuters) – Fears over renewed tensions with the United States reversed some of the Turkish lira’s overnight gains in early trade on Thursday following a dovish Fed decision that had boosted emerging market currencies late on Wednesday.

The United States could soon freeze preparations for delivering F-35 fighter jets to Turkey, officials told Reuters, in what would be the strongest signal yet by Washington that Ankara cannot have both the advanced aircraft and Russia’s S-400 air defences system.

The lira firmed to 5.4160 against the dollar in the wake of the Fed decision but eased back to 5.4415 after Reuters report, analysts said.

Amid a slowing economy the Fed now sees only one rate hike next year, and announced a plan to end its balance sheet reduction program by September.

“It’s a very positive decision for emerging market currencies including the lira, and we were able to observe its impact on the market, with lira gaining around 1 percent against the dollar,” an Istanbul-based forex trader said.

“However, the report that ties with the U.S. are seen entering a difficult period was the only factor that limited this rise.”

The United States is nearing an inflection point in a years-long standoff with Turkey, a NATO ally, after so far failing to sway President Tayyip Erdogan that buying the S-400 Russian air defense system would compromise the security of any F-35 aircraft delivered to Turkey.

While no decision has been made yet, U.S. officials confirmed that Washington was considering halting steps now underway to ready Turkey to receive the F-35, which is built by Lockheed Martin Corp.

FILE PHOTO: Chinese staffers adjust U.S. and Chinese flags before the opening session of trade negotiations between U.S. and Chinese trade representatives at the Diaoyutai State Guesthouse in Beijing, Thursday, Feb. 14, 2019. Mark Schiefelbein/Pool via REUTERS/File Photo

March 21, 2019

BEIJING (Reuters) – China’s commerce ministry said on Thursday that a U.S. trade delegation headed by Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will visit Beijing on March 28-29 for another round of negotiations.

Chinese Vice Premier Liu He will travel to the U.S. in early April for more talks, Gao Feng, the commerce ministry spokesman told reporters in a regular briefing.

BEIJING (Reuters) – China’s imports and exports rebounded in the first half of March, Gao Feng, a commerce ministry spokesman said on Thursday, adding that the overall trade performance in the first quarter remained stable.

China’s exports tumbled the most in three years in February while imports fell for a third straight month, pointing to a further slowdown in the economy.

FILE PHOTO: Drilling rigs are parked up in the Cromarty Firth near Invergordon, Scotland, Britain January 27, 2015. REUTERS/Russell Cheyne

March 21, 2019

By Henning Gloystein

SINGAPORE (Reuters) – Oil eased away from 2019 highs reached earlier in the session on Thursday, but markets remain relatively tight amid supply cuts led by producer club OPEC and U.S. government sanctions against Iran and Venezuela.

U.S. West Texas Intermediate (WTI) crude futures were at $60.12 per barrel at 0712 GMT on Thursday, down 11 cents, or 0.2 percent from their last settlement. WTI reached its highest level since Nov. 12 earlier in the day, at $60.33 per barrel.

International Brent crude oil futures were at $68.52 a barrel, close to their last settlement after hitting $68.69 a barrel earlier in the session, the highest since Nov. 13.

Crude prices have been pushed up by almost a third since the start of 2019 by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), as well as by sanctions enacted against Iran and Venezuela by the United States.

OPEC’s crude oil output has slumped from a mid-2018 peak of 32.8 million barrels per day (bpd) to 30.7 million bpd in February.

“Venezuelan exports to the U.S. have finally dried up, after the sanctions were placed on them by the U.S. administration earlier this year,” ANZ bank said on Thursday.

Iranian oil exports have also slumped. The United States aims to cut Iran’s crude exports by about 20 percent to below 1 million bpd from May by requiring importing countries to reduce purchases to avoid U.S. sanctions.

The OPEC cuts and sanctions have also tightened supply within the United States.

U.S. crude oil stockpiles last week fell by nearly 10 million barrels, the most since July, boosted by strong export and refining demand, the Energy Information Administration said on Wednesday.[EIA/S]

Stockpiles fell 9.6 million barrels, to 439.5 million barrels, their lowest since January.

Part of the drawdown is due to surging U.S. exports, which stood at a four-week average of 3 million bpd, double the amount this time a year ago, according to the EIA.

The rising exports come amid steep growth in U.S. crude oil production, which returned to its record of 12.1 million bpd last week, making America the world’s biggest producer ahead of Russia and Saudi Arabia.

Dutch Prime Minister Mark Rutte (R) of the VVD Liberal party and Dutch far-right politician Geert Wilders of the PVV Party take part in a meeting at the Dutch Parliament after the general election in The Hague, Netherlands, March 16, 2017. REUTERS/Yves Herman

March 21, 2019

By Toby Sterling

AMSTERDAM (Reuters) – An upstart populist party shocked the Dutch political establishment by winning the most votes in provincial elections after a preliminary count in the early hours of Thursday, boosted by a possible terrorist attack this week in the city of Utrecht.

The result shows the enduring strength of far-right populism in the Netherlands, coming nearly two decades after the assassination of populist Pim Fortuyn in 2002 led to a similar upset in parliamentary elections.

The most important short term impact is that Prime Minister Mark Rutte’s center-right coalition will be forced to seek outside support to win Senate approval for laws passed by parliament. Provincial votes determine the composition in the Senate, where Rutte’s government has lost its majority.

The big winner in the vote was the Forum for Democracy party, led by 36-year-old Thierry Baudet, which holds just two seats in parliament after entering politics in 2016. On current projections it will have an equal number of seats in the Senate as Rutte’s VVD.

In a speech to supporters peppered with literary allusions, Baudet said the arrogance of the elites had been punished.

“We are standing in the rubble of what was once the most beautiful civilization in the world,” he said.

Following the lead of U.S. President Donald Trump, Baudet opposes immigration and emphasizes “Dutch first” cultural and economic themes. He opposes the euro and thinks the Netherlands should leave the European Union.

Baudet had continued campaigning when other parties stopped after Monday’s attack in Utrecht, in which a gunman shot three people dead on a tram. Baudet blamed the incident on the government’s lax immigration policies.

A 37-year-old Turkish-born man has been arrested on suspicion of carrying out the shooting. Prosecutors have not determined a motive, though they say it may have been terrorism.

Pollsters had for weeks predicted Rutte’s center-right coalition would lose its Senate majority. But experts, including pollster Maurice de Hond, said the Utrecht attack boosted turnout most among opponents of immigration.

The Dutch economy has been one of Europe’s best performers under successive Rutte-led governments, but resentment over early 2010s austerity programs lingers. Recent debate has focused on funding the government’s plans to meet international goals on climate change.

GOING GREEN

Left-leaning voters feel not enough is being done and supported the pro-environment Green Left party, which also booked big gains nationwide on Wednesday, including taking nearly a quarter of the vote in Amsterdam.

Rutte is expected to look to the Green Left or Labour parties for outside support once the new Senate is seated in May, though there are other possibilities in the increasingly fragmented political landscape, which include religious parties and a party focused on voters older than 50.

Rutte said he would be looking for support from “constructive” parties on either the left or the right. Baudet ruled out any cooperation.

“This means drinking a lot of coffee and making even more phone calls” Rutte told supporters.

“So I’m counting on it that the country will remain well manageable with this result.”

The state-run banks are also pushing Goyal to step down, CNBC-TV18 added.

Jet has more than $1 billion in debt, and owes money to banks, suppliers, pilots and lessors – some of whom have started terminating leases with the carrier.

The government has asked state-run banks, led by State Bank of India (SBI), to rescue Jet without pushing it into bankruptcy, two people within the administration have told Reuters, as Prime Minister Narendra Modi seeks to avert thousands of job losses weeks before a general election.

Several people who have worked closely with Goyal, 69, have told Reuters that his penchant for control has emerged as a major obstacle in negotiating a rescue deal.

SBI Chairman Rajnish Kumar had said on Wednesday that a resolution plan was “almost” ready and that it would not involve a bailout for any individual, including Goyal.

Jet and SBI did not immediately respond to requests for comment on Thursday, which is a public holiday in India.

FILE PHOTO: A logo of German energy utility company Uniper SE is pictured in the company’s headquarter in Duesseldorf, Germany, March 8, 2018. REUTERS/Thilo Schmuelgen/File Photo

March 21, 2019

FRANKFURT (Reuters) – Activist investor Elliott has called for a shareholder vote to instruct German utility Uniper’s management to enter negotiations with top investor Fortum over a domination agreement.

Elliott, Uniper’s second-largest shareholder with 17.84 percent, wants its motion to be discussed at the group’s next annual general meeting on May 22, it said, adding that it would otherwise ask for an extraordinary general meeting.

Its proposal comes a month after Uniper and Fortum announced fresh cooperation talks in an attempt to repair their relationship, which has been strained ever since the Finnish state-owned group launched its hostile takeover attempt in 2017.

FILE PHOTO: A resident gets pork from a vendor at a market in Beijing, China December 26, 2018. REUTERS/Jason Lee

March 21, 2019

WUZHEN, China (Reuters) – China’s imports of pork will increase ‘substantially’ after the first quarter, following an epidemic of African swine fever that has reduced pig production, a leading analyst said on Thursday.

Domestic production of pork by China, which produces about half of the world’s total, will fall by up to 20 percent in 2019, said Oscar Tjakra, director, Food & Agribusiness research at Dutch lender Rabobank.

China’s pig herd declined by 15 percent in 2018, according to the bank’s estimates, Tjakra told a conference in Wuzhen.

FILE PHOTO: Two women walk next to the Reserve Bank of Australia headquarters in central Sydney, Australia February 6, 2018. REUTERS/Daniel Munoz

March 21, 2019

By Swati Pandey

SYDNEY (Reuters) – Australia’s tumbling house prices would not necessarily translate into cuts in official interest rates if growth and inflation expectations remain strong, central bank research showed on Thursday.

While the report from the Reserve Bank of Australia (RBA) is not a policy outlook paper, it provides an insight into the research that shapes its views.

The paper also comes as the country’s once high-flying property market nosedives and consumers in the A$1.9 trillion ($1.36 trillion) economy cut back on spending.

The article, which appeared in the RBA’s monthly bulletin, said “a fall in housing prices would have fewer negative consequences if it was offset by other developments which meant that the overall economic outlook was positive and the unemployment rate was falling.”

It also noted that “despite the fall in housing prices, interest rates may not need to be reduced as much to offset the effect of that price fall” if households and businesses expected strong growth and inflation in line with central bank targets.

The research noted the uncertainties related to estimating the effects of plunging property prices on household consumption. It identified a “positive and stable relationship” between household wealth and consumption, but that link somewhat broke when prices were in a downward spiral.

“A decline in household wealth is less likely to coincide with weaker consumption growth if it occurs at a time when the labor market is strong and household income growth is firm,” the RBA’s researchers noted.

The RBA has said previously the economy is entering “uncharted territories” as this housing downturn has occurred alongside record-low policy rates and solid jobs momentum.

Data out earlier in the day showed Australia’s jobless rate fell to a near eight-year low of 4.9 percent as employment growth extended its dream run.

However, there are questions over how much further unemployment could fall and how households would react to an extended downturn in the property market. Australia’s housing stock is worth a cool A$6.68 trillion, but has fallen by A$280 billion since its peak in early 2018.

An increasing number of economists already expect a cut in the official cash rate from a record low of 1.50 percent this year, while financial markets are fully pricing in a policy easing as early as September.

The RBA’s modeling shows net wealth is not the sole determinant of consumption though. Household disposable income, the level of real interest rates, the unemployment rate and the economic performance also matter.

The RBA also looked at the effects of a prolonged fall in housing prices – an experience that Australia has not had in the past.

“The net effect of a fall in housing prices that occurs when broader macroeconomic conditions are positive might be only a small slowdown in the pace of economic activity,” the RBA said.

“However, if the same fall in housing prices occurred alongside a broader slowdown in economic conditions, this could add to any case for an easing of monetary policy coming from the broader slowdown.”

Post Calendar

Finance Minister Olaf Scholz addresses a news conference to present the budget plans for 2019 and the upcoming years in Berlin, Germany March 20, 2019. REUTERS/Fabrizio Bensch March 20, 2019 BERLIN (Reuters) – With solid public finances and a vibrant domestic economy, Germany is well placed to withstand headwinds from a weakening world economy, trade […]

FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., March 13, 2019. REUTERS/Brendan McDermid March 20, 2019 By Medha Singh (Reuters) – U.S. stock futures were little changed on Wednesday as investors waited for more clarity on the Federal Reserve’s interest rate outlook for the year, […]

FILE PHOTO: An attendant walks past EU and China flags ahead of the EU-China High-level Economic Dialogue at Diaoyutai State Guesthouse in Beijing, China June 25, 2018. REUTERS/Jason Lee March 20, 2019 BRUSSELS (Reuters) – European Union leaders will coordinate their positions on Thursday evening on a number of issues they intend to raise with […]

FILE PHOTO: A Federal Express delivery truck is shown in downtown Los Angeles, California, U.S., October 24, 2018. REUTERS/Mike Blake March 20, 2019 (Reuters) – Shares of FedEx Corp fell about 7 percent before the bell on Wednesday after the package delivery company cut its 2019 profit forecast for the second time blaming slowing global […]

FILE PHOTO: Moldovan President Igor Dodon addresses the media as he visits a polling station during a parliamentary election in Chisinau, Moldova February 24, 2019. REUTERS/Vladislav Culiomza March 20, 2019 Source: OANN

President Donald Trump jabbed Democrats, saying they are getting very “strange” for a series of proposals from presidential hopefuls. Trump’s comments came in a tweet shortly after midnight Wednesday. He wrote: “The Democrats are getting very ‘strange.’ They now want to change the voting age to 16, abolish the Electoral College, and Increase significantly the […]